Strategic Human Resource Management of

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12 Strategic Human Resource Management of International Assignments Dr Marie Waxin

Objectives Throughout this chapter, the student will be exposed to: • The different approaches to staffing foreign operations • The reasons for using international assignments: position filling, sharing and transferring knowledge, developing employees, and controlling and coordination of international activities • The different categories of international personnel: parent country, host country, and third country nationals, impatriates • The different types of international assignment for parent country nationals: expatriates, short-term assignees, international commuters and frequent flyers, global managers, and high potentials. • The different steps of the strategic management of international assignments: strategic planning and job analysis, recruitment, selection, preparation to transfer, cross-cultural adjustment and organizational support, performance appraisal, compensation, repatriation, and retention.

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Opening Case Imagine that you are Stephen Grant, marketing manager in a large international company in London, United Kingdom. The following are some personal facts. • You are married to a financial analyst who works in a bank located in the same city. • You have two children—a boy, aged 10, and a girl, aged 8. • You and your family are actively engaged in a variety of volunteer activities sponsored by your church, which include environmental activities and providing food for the needy. • You and your spouse enjoy sports activities together—you jog, play tennis, and golf on regular basis. You also enjoy cultural events together, such as concerts and plays. You have just received the following letter from your employer. Dear Stephen, We are pleased to inform you that you have been selected as a candidate for an overseas position in our subsidiary in Kenya. Please contact M. Santerre, our international human resources manager, as soon as possible to discuss this opportunity further. Best regards Graham White, International Marketing. Question: Individually, consider this situation and how you would react to it. Identify your major concerns as well as reasons why you would want to accept or decline such an offer. Source: Compiled by Marie Waxin.1 International managers constitute valuable resources that organizations do not always use to the best of their potential. Further, senior managers assigned to positions in foreign subsidiaries do not always live up to their bosses’ expectations. When they succeed in their international assignments, they often leave the organization upon returning to their country of origin. Organizations can reverse this trend by encouraging managers’ international mobility, through better planning of assignments, better recruitment and selection practices for international assignments, better pre-departure preparation, better performance management, and better management of the return of their international managers.

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The following challenges are associated with the strategic management of international assignments: • Assigning the right kind of international manager to the right position, at the right time • Designing international HR practices for balancing generic and local needs on the one hand, and control, coordination, and autonomy needs on the other • Establishing balance between global competitiveness and reactiveness to the local environment’s peculiarities • Identifying the needs for international personnel with a high degree of precision • Strategic management of international assignments and of international personnel at the lowest cost: what type of international employee must be chosen, and to fulfill which position? Which type of contract must be drafted? In the following sections, we will first look at the different approaches to international staffing, the reasons for using international assignments, and the different types of international employees. Then, we will propose a model for the strategic management of international assignments. Finally, we will look at the role played by women in the global arena.

The Different Approaches to International Staffing The international HRM (iHRM) literature uses four terms to describe MNE approaches to managing and staffing their subsidiaries. These terms come from Perlmutter2 who identified among international executives three different attitudes—ethnocentric, polycentric, and geocentric—toward building a multinational enterprise. The distinctions are based on top management assumptions upon which functional and geographical decisions about key products are made. Perlmutter’s distinction between these three different approaches was later refined by Heenan and Perlmutter,3 who added a fourth attitude: regiocentric. To describe these four attitudes, the authors use the concepts of complexity of organization, authority and decision-making, evaluation and control, rewards and punishments, communication processes, geographical identification, basic HRM strategy and state of internationalization (Exhibit 12.1). These distinctions, now widely accepted, have been used in various scholarly books on international human resource management. Heenan and Perlmutter’s3 attitudes are presented in Exhibit 12.1. We will see how these four attitudes influence the degree of utilization of the different categories of international personnel.

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High in HQ; low in subsidiaries

Rewards and punishments; incentives

Wide variation; big or small rewards for subsidiary performance

Determined locally

Relatively low in headquarters

Rewards for contribution to regional objectives

Determined regionally

High regional HQ and/or high collaboration among subsidiaries

Highly interdependent on a regional basis

Regiocentrism

Rewards to international and local executives for reaching local and worldwide objectives

Standards which are universal and local

Collaboration of HQ and subsidiaries around the world

Increasingly complex and highly interdependent on a worldwide basis

Geocentrism

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High in headquarters (HQ)

Authority and decision-making

Varied and independent

Polycentrism

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Evaluation and control

Complex in home country, simple in subsidiaries

Complexity of organization

Ethnocentrism

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Exhibit 12.1

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Early

State of internationalization

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Regional people developed for key positions anywhere in the region

Regional company

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Best people everywhere in the world developed for key positions everywhere in the world

Truly worldwide company, but identifying with national interests

Both ways and among subsidiaries around the world

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People of local nationality developed for key positions in their own country

Nationality of host country

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People of home country developed for key positions everywhere in the world

Nationality of owner

Geographical identification

Little to and from headquarters; little among subsidiaries

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Basic HRM strategy

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Communication and information flow

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Ethnocentric Approach. Strategic decisions are made at headquarters, and foreign subsidiaries have little autonomy. Key jobs at both domestic and foreign operations are held by headquarters management personnel and subsidiaries are managed by expatriates from the home country. Head office managers see expatriation as a way to accelerate the progression of their career, since the competence development of expatriates is preferred to that of local managers. Polycentric Approach. In this case, expatriation is no longer at the center of the international development strategy. The MNC treats each subsidiary as a distinct national entity and empowers it with some decision-making autonomy. Subsidiaries are usually managed by local nationals (HCNs), who are seldom promoted to positions at headquarters. With this approach, the MNC avoids the difficulties associated with expatriation and cross-cultural adjustment. The control exercised by the head office is weak, and the diversity of the situations in which the subsidiaries find themselves complicates the process of integrating the organization’s international activities. Geocentric Approach. With this approach, the MNC designs its strategy from an international standpoint right from the beginning. The organization favors ability and experience over nationality. Parent country nationals (PCNs), third country nationals (TCNs), and host country nationals (HCNs) are thus equally mobile internationally. In order to be successful, this approach to staffing without regard to nationality must be accompanied by a worldwide, integrated business strategy. Regiocentric Approach. The MNC that favors a regiocentric approach adopts uniform practices for all managers within the same geographical zone. Like the MNC that functions with a geocentric approach, it utilizes a wider pool of managers but in a limited, regional way. Personnel may move outside of their countries, but only within their particular geographic region. For instance, European managers are mobile solely within Europe. Regional managers may not be promoted to headquarters positions but they enjoy considerable regional autonomy in decision-making (see Exhibit 12.1).

Functions of International Assignments Why use international employees? Reasons vary from one multinational organization to the other, but an analysis of the literature suggests that international employees fulfill five major roles. The first three roles are tactical in nature: fulfilling a need for a certain type of personnel that is not available in the host country, sharing and transferring information, and developing the capacities and level of implication of managers within the organization. The other two roles are strategic in nature: controlling and coordinating activities.

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Fulfilling a Specific Need for Personnel and Know-how The first role of international assignments is to fulfill the insufficient technical and managerial competencies in certain countries where the market structure is often characterized by a shortage of engineers, senior technicians, and trained managers.

Sharing and Transferring Knowledge Another reason for using international assignments is to share and exchange information. A multinational organization can send an expatriate employee in order to better understand a subsidiary’s activities in a particular context, to share knowledge regarding a new type of equipment or a specific tool, or to communicate elements of its organizational culture, processes, or competencies. Expatriation allows for a rapid and efficient transfer of know-how. The need for such an assignment can arise, for instance, when setting up an activity that does not exist in the host country. Expatriation then plays a role in the training of the local personnel, until the subsidiaries enter a growing phase, who then replace the expatriate employees in management and supervision positions. It is important to note that the knowledge transfer does not only flow from the head office to the subsidiaries, but also between the subsidiaries and from the subsidiaries toward the head office. According to Black et al.,4 there are two unique aspects to expatriation with regard to information exchange. First, the duration of the assignments, between one and five years, allows the collection and transfer of complex information. Secondly, the information exchange takes place not only during the expatriation, but also afterward. The organization can benefit from the expatriate’s acquired knowledge concerning the foreign subsidiaries and integrate that knowledge in the strategic planning and decision-making processes.

The Development of Managers and their Implication Toward the Organization International assignments constitute a proven method for developing global managers. Most senior managers have extensive international experience. When the expatriate’s role comprises supervision functions, expatriation can play a prominent role in developing managerial competencies and in fostering loyalty toward the organization. Indeed, expatriation allows junior managers or high-potential employees to face new situations, to develop new

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competencies, especially when it comes to acting autonomously and taking risks, thus facilitating the development of abilities required for becoming a senior manager. The managers’ various international experiences help in developing a global understanding of the organization. Moreover, international transfers develop the individual’s commitment toward the organization, his orher feeling of belonging and his loyalty. Organizations that use expatriation to improve their managers’ competencies, either formally or not, associate expatriation with promotions. Organizations that use expatriation to improve their managers’ abilities associate international assignments more or less formally with a promotion. This practice gets the message through to expatriates that their international experience will be valued as an asset. Control of Activities. From an organizational standpoint, managers are generally expatriated in the early phase of the internalization process, in order to control the subsidiaries’ activities. In an international context, the transfer of managers constitutes an informal control mechanism, which can complement or replace more formal control measures such as the elaboration of norms and procedures common to all subsidiaries. Expatriate employees are also used to reduce the uncertainty stemming from the environment (political risk, cultural distance, legal environment, competition), which is also a form of control. As these uncertainty factors increase in importance, the role of the expatriate becomes increasingly managerial in nature. Similarly, the higher the interdependence between the head office and the subsidiaries and the more complex the activities, the more the expatriates’ function will be control oriented. Coordination of Activities. Expatriates as well as impatriates play an essential part in the coordination of subsidiaries’ activities. Through complex dialectic processes (local/global, individual/collective), international assignments are aimed at reinforcing the integration of individual and organizational dynamics which contribute to the cohesion of the firm. International assignments indeed allow for the creation and development of international networks that reinforce the integration of activities. According to Janssens and Brett,5 the coordination of a global organization relies on three elements: centralization (decision-making by a core of senior managers), formalization (decision-making following established rules and procedures), and socialization (decision-making following shared norms and values). The various functions of international assignments demand different types of international employees, with different profiles. For instance, if the main purpose of an assignment is managerial development, the organization will select a junior manager or a high-potential employee. If, on the other hand, the main purpose of an assignment is to control a subsidiary’s activities, the organization will select an experienced manager who is familiar with the

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head office’s values and managerial procedures. Finally, it must be noted that the five functions of international assignments are not mutually exclusive and can be combined.

Types of International Personnel In this section, we will look at the main categories of international employees, discuss their respective advantages and disadvantages, and present the various types of assignments for employees from the organization’s country of origin.

The Different Categories of International Personnel In the literature, four categories of international personnel have been identified, based on their country of origin and the location of their assignment. These categories are parent PCNs, HCNs, TCNs, and impatriates. The PCNs are employees from the multinational’s head-office (expatriate employees). For instance, a Japanese manager working in a Japanese multinational’s French subsidiary is an expatriate, or a PCN. The HCNs are employees from the host country (the subsidiary’s). For instance, a French manager working in a Japanese multinational’s French subsidiary is an HCN. The TCNs are employees from countries other than that of the multinational’s head office and that of the subsidiary. For instance, a Belgian manager working in a Japanese multinational’s French subsidiary is a TCN. An example of a multinational using these three types of international employees is Honda: working in Honda’s subsidiary in Dubai are one Japanese manager, an expatriate from Honda JAPAN, the international head office, one French expatriate from the European head office, and 35 HCNs (Indians and Philippinos). “Impatriates” (as opposed to expatriates) are HCNs sent to the head office. The reasons most frequently cited to justify hiring HCNs for transfer at the head office have to do with competence development of managers, knowledge transfer, and subsidiary integration. Moreover, generating a flow of impatriates toward the head office is an excellent way to trigger the process of socializing NPHs. Through impatriation, HCNs develop a sense of belonging to the global organization. The reasons for using impatriation determine the selection criteria for future impatriates. When the main goal is knowledge transfer and subsidiary integration, for example, communication skills in the multinational’s official language as well as in the subsidiary’s language are important criteria. Finally, it is worth noting that the duration of impatriations is generally shorter than that of expatriations. Many organizations use impatriates in order to reduce, in the end, the number of expatriates.

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When a specific position needs to be filled, how should organizations choose between the different categories of international employees? Usually, the choice is partly determined by three elements: the general staffing policy on key positions in headquarters and subsidiaries (ethnocentrism, polycentrism, geocentrism, and regiocentrism), the constraints imposed by the host governments on hiring policies, and staff availabilities. Beyond these considerations, the advantages and disadvantages associated with PCNs, HCNs, and TCNs, presented below, are considered. Six criteria seem relevant to discuss the respective advantages and disadvantages of these three categories of international employees. 1. 2. 3. 4. 5. 6.

Cost Knowledge of the organization (products, organizational culture) Cultural proximity Knowledge of the local environment Attitude of the foreign government Promotability of local employees.

With regard to costs for the organization, hiring a PCN always costs more than hiring an HCN. On average, an expatriate’s salary is two to two and a half times that of a local employee or of a TCN. These costs increase if the expatriate fails in his assignment. The high cost of expatriation sometimes leads the organization to opt for other solutions, such as shortterm assignments. The PCNs, however, present two advantages compared to the other categories of international managers. First, their technical and managerial competencies have been put to test in their previous positions, in the parent country, and have been recognized by the head office. Secondly, they possess extensive knowledge of the organization: its products, its managers, and the organizational culture. These two characteristics allow for efficient communication with the head office. As far as cultural proximity and knowledge of the local environment are concerned, HCNs are obviously at an advantage. All things being equal, a local employee who speaks the local language, understands the political system and, often enough, is a member of the local elite, should prove to be more efficient than a foreign manager. For local personnel, cultural adjustment is not an issue. Training HCNs also seems simpler, from a short-term point of view, than selecting high-potential employees from the organization’s country of origin and spending resources in order for them to adjust to the host country. Well-trained local managers thus constitute first-rate candidates for organizations. On the other hand, local managers are not familiar with the organization and with its culture. In addition, local managers might be too deeply involved in the local community and have a

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hard time understanding the parent company’s global strategy, and few of them might truly identify with the organization and its goals. Local governments sometimes exert explicit or implicit pressure on multinational companies so that they develop and promote local managers to key positions in order to “nationalize” the management or foreign subsidiaries. Local legislation concerning working visas partly determines the subsidiary’s capacity to hire TCNs. In some countries, such as Canada, companies may hire TCNs only if they can prove that available “local” candidates were not suitable for the position. Finally, the constitution of a pool of international managers takes place at the expense of the recruitment and promotion of local managers and vice versa. Third country nationals can be closer to the country of origin’s culture than HCNs, but they hinder local managers’ chances to get promoted. The choice to hire TCNs must thus be made taking all these considerations into account. Selection between the three classic categories of managers will be influenced, beyond the vast differences in terms of advantages and disadvantages of each, by the degree of internationalization of the company, its internationalization strategy, its iHRM approach, its international assignment policy, and the specific needs of its subsidiaries. The more the head office wishes to impose its nationalistic views (ethnocentric approach), the more it resorts to expatriation, and the more the head office wishes to expose its geocentric side without trying to impose the control methods used at the head-office, the more it will select based on competence rather than nationality. Exhibit 12.2 summarizes the advantages and disadvantages of the various categories of international managers.

The Different Types of International Assignment for PCNs Within organizations, many types of assignments can be found for PCNs. The duration of assignments distinguishes between expatriations and different kinds of short-term assignments. In addition, the role of international assignments in an employee’s career distinguishes between global managers, expatriates, and international junior managers. Long-term Assignments, or Expatriations. An expatriation is an assignment abroad, for a duration of one to five years, but generally three. The employee and his family are relocated to the host country. At the end of his initial contract, if the employee wishes to remain with the subsidiary, it will be under a local contract. According to Harris,6 expatriations are mostly used for strategic missions, and meet the needs of the control function (a function that was mentioned by 62 percent of companies using expatriate employees), knowledge transfer function (74%), and professional development function

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Exhibit 12.2

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• Lack of knowledge regarding country’s economic development, culture, legal system, and political process • Very expensive to both relocate and maintain (expatriates—people working and residing in their non-native countries) • Legal restrictions imposed by many countries as to the number of foreign employees that can be employed • Cultural difficulties hindering recruitment and training activities • Lack of knowledge concerning the organization, its products, and its services • Communication problems with the head office • May not be as familiar with the business culture and practices • Control and coordination of headquarters may be impeded • Legal restrictions imposed by many countries as to the number of foreign employees that can be employed • Hinders local employees’ chances to get promoted • Lack of loyalty towards the organization

• Control over the subsidiaries • Share a common culture and educational background • Facilitate communication and coordination with corporate headquarters

• Understand and know local laws, culture, and economic conditions • Cost is much lower • Opportunity for development and source of motivation • Legal regulation of employment

• Costs are lower than those of PCNs • Knowledge of the organization, of its practices, of its management policies • Culture close to that of the head office

Parent country nationals (PCNs)

Host country nationals (HCNs)

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Third country nationals (TCNs)

Disadvantages

Advantages

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(60%). Expatriations, however, are costly for companies. The main difficulties related to expatriate management concern dual career couples, lack of candidates for assignments in less-attractive areas and repatriation. Organizations’ first concern is, however, the high cost associated with expatriations. In order to avoid those costs and the difficulties associated with managing expatriates, more and more companies reduce the number of expatriate employees, propose shorter-term assignments, localize their expatriates, offer less generous compensation packages, and hire more local employees. Avaya’s strategies to reduce the number of career expatriates Avaya Inc., a provider of communication systems in Basking Ridge, New Jersey, with 15,000 employees, keeps its number of expatriates low (currently at 15, down from 90 two years ago) by using three strategies: First, Avaya started sending more employees on short-term assignments in 2002. The short-term assignment, generally six months long, is treated more like a business trip. The employee stays in a hotel or company apartment and is reimbursed for meals and trips to home every other month, eliminating the need to pay pricey housing allowances and costs related to moving the employee’s family. The company is now tightening its policies for short-term assignments. “We want to treat employees on a fair and equitable basis    rather than basing it on each person’s negotiating power or each manager’s willingness to say yes or no”. Second, Avaya controls costs by hiring third country nationals. Avaya currently has 365 foreign nationals, about twice as many as it had two and a half years ago. By hiring foreign nationals, the company saves because benefits such as tax assistance, education for dependents and housing allowances are offered only for a limited time. Also, foreign nationals aren’t paid a cost-of-living adjustment, a hardship allowance or an expatriate premium. Foreign nationals also typically don’t need as much time to acclimate because they don’t face the cultural barriers that an American might. There’s no language problem and that person is also in tune with the business style of the region. And third, Avaya started localizing some of the expats. Once expatriates are localized, Avaya phases out housing and schooling allowances after a year, pays employees in the local currency, switches them to local health benefits and doesn’t have to pay income tax in both countries. For an expatriate who earns a salary of $100,000, the dual income taxes alone cost $140,000.

Source: Leslie Gross Klaff.7 Short-term Assignments (1–12 months). Employees sent on short-term assignments stay in the host country between one and twelve months. Technically, the employee might be hired by the subsidiary, and receive a mobility bonus. The employee’s family may go along but, in practice, this rarely happens. Career management takes place at the head office and performance evaluation is often shared between the head office and the host country. According to Harris,6 short-term assignments can be used to compensate

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for the lack of mobility of dual-career couples. This type of assignment is used mainly for knowledge transfer (69%) and for managerial development (39%). Short-term assignments may prove stressful for employees. Indeed, it becomes difficult to maintain a proper balance between work and private life, because of the long work hours in the host country and because of the distance between the employee and his social and family environments. Organizations have a hard time establishing consistent policies and practices, and managing taxation and compensation issues. In addition, Harris6 identifies two other sub-categories of short-term assignment: the “international commuters” and the “frequent flyers.” “International commuters” travel between their country of origin and the host country once or twice per week, while their family remains in the country of origin. “Frequent flyers” travel frequently for business, for periods of thirty-one days or less, while remaining based in the country of origin. Usually, business trip and per diem policies apply to those trips. According to Harris,6 “international commuters” and “frequent flyers” are used to carry out operational assignments, but are also adequate for control and knowledge transfer functions, as well as replacement of local competencies and coordination. These assignments often lead to problems with work/family balance and excessive fatigue among employees. In addition, the impact of cultural differences is often underestimated in these assignments and crosscultural training is generally nonexistent. Finally, organizations often lack consistent policies regarding these assignments. According to Harris,6 organizations are not monitoring these alternatives to long-term expatriation closely enough, often having little idea of their number, how much they cost them, and how cost-effective they might be. Global Managers. As opposed to the expatriate manager, who spends between one and five years abroad and then returns to the head office, the global manager strings together multiple expatriations for the duration of his or her career. Global managers have an international career, have shown their ability to survive and work efficiently in various cultures, have great communication skills, and an open mind. The international life style is a true motivation for them, and the management of their career is centralized at the head office.7 International Junior Managers. International junior managers are sent abroad to develop their managerial abilities. They are young managers, mostly high-potential employees. In conclusion, organizations use global managers and expatriates for strategic assignments, short-term assignments for tactical missions, commuters and frequent flyers for operational missions, and international junior managers for managerial development. These distinctions between the various types of international assignments for PCNs give organizations the

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flexibility to react to the different problems they encounter at the lowest possible cost. In expatriation policies, specific sections can be found concerning the different types of contracts.

Strategic Management of International Assignments Many companies are sending employees and managers abroad to implement their global strategies and to control or coordinate their far-flung subsidiaries.9 But sending managers abroad is very expensive. Black and Gregersen10 showed that expatriates cost two to three times what they would in an equivalent position back home. Moreover, between 10 and 20 percent of the expatriates come back before the end of their contract because they could not adjust to the job or to the country. Among those who stay in their position abroad, one-third do not perform up to their supervisor’s expectations.10 International managers constitute a crucial and competitive resource for multinationals, a resource that needs to be managed and developed. Value created by international assignments depends on the way they are planned and managed. Basing themselves on the literature and on interviews with international HR managers, Waxin et al.11 propose a model for the strategic management of international assignments. This model comprises eight steps: (1) strategic planning and job analysis, (2) recruitment, (3) selection, (4) preparation for the transfer, (5) adjustment and organizational support, (6) evaluation and performance management, (7) Compensation and (8) repatriation and retention (Exhibit 12.3).

Strategic Planning and Job Analysis According to Waxin et al.,11 the first step consists in establishing, for each international assignment (1) the goals, (2) the job description, (3) the job specification and (4) the ownership for the responsibility of managing the full expatriation/repatriation cycle. Firstly, the goals of each international assignment must be specified, and their strategic value must be determined with regard to the organization’s strategic objectives. What are the assignment’s goals? (increase the organizational performance, train local employees, transfer the head office’s organizational culture toward a subsidiary, solve a technical problem, launch a new product, etc.). Which of these objectives are directly linked with the organization’s strategic objectives? Dowling and Welch12 distinguish between hard, soft and contextual job goals. Hard goals are objective, quantifiable, and can be directly measured (e.g., return on investment, or market share). Soft goals tend to be relationship- or trait–based, like leadership

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Exhibit 12.3 A Model for the Strategic Management of International Assignments Strategic planning and job analysis Repatriation and retention

Recruitment

Compensation

Selection

Performance appraisal

Preparation

Adjustment

Source: Waxin et al.11

style or interpersonal skills. Contextual goals attempt to take into consideration factors that result from the situation in which performance occurs, like arbitrary transfer pricing or other financial tools for transactions between subsidiaries to minimize foreign risk exposure. Job goals will be translated later on into performance appraisal criteria so specificity and measurability are essential. However, there are considerable differences in the way the goal-setting process is handled in different countries. Tahvanainen13 found that in Sweden and Germany, for example, it is normal for managers to participate in the setting of job goals, whereas setting job goals is the priority of senior managers in the USA. The job analysis, which comprises of the job description and the competency profile, must then be carried out. The job description contains general information on the position, the goals to be met, a list of tasks in order of importance, the particular conditions, the context of the position, the duration of the contract, the date of review, and the date of approval. In the context of an international assignment, the job’s context must be described in great detail; the main characteristics of the subsidiary’s organizational culture must be identified, as well as those of the host country. Harvey14 suggests that job analysis must generate criteria that adequately capture the nature of international work as opposed to the domestic context, in order to provide valid appraisal information.

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The job specification states the required knowledge, abilities (know-how) and experience, and personal characteristics for the job. The profile must be objective and realistic. In order for such a profile to be drawn, the competencies required to complete each task of the job description must be identified and weighed. In the context of an international assignment, it is important to include in the profile cultural competencies and personal characteristics, such as a social orientation, cultural flexibility, stress resistance, and so on that are required.15 Ideally, the job specification will be used again as a basis for the choice of the evaluation criteria. Finally, ownership for the responsibility of the management of the full expatriation/repatriation cycle must be determined. Will the expatriate refer to their home- or host-country HR manager during their assignment? This is where collaboration between home and host HR and line management is essential. Confusion will only make communication between the expatriate and HR more difficult, and will make the expatriate feel less supported. This first step helps determine the ideal type of international manager for the position (PCN, TCN, HCN, other type of international employee). The objectives of the position, the job description and specification, and the details about the management of the expatriation/repatriation processes should be explained to the candidate by the end of the selection process. In any case, the expatriate should know the exact purposes of his assignment before the beginning of his assignment.

Recruitment of International Employees The main objectives of international recruitment are (1) elaborating ways and techniques which will allow the organization to attract a sufficient number of motivated and qualified international candidates, (2) identifying candidates susceptible to filling foreign positions at the lowest possible cost, and (3) increasing the pool of international candidates at the lowest possible cost, anticipating for the organization’s future needs in personnel. The major decisions at this step regard the sources and the methods of recruitment. Recruitment Sources. The first decision to be made is whether to recruit internally or externally. In spite of the external recruitment possibility, it is well documented that the majority of firms depend almost exclusively on internal recruitment for foreign positions, especially for their expatriate’s positions. This preferred recruitment option can be found even in local markets where there is plenty of skilled labor. Why is there not a greater emphasis on external recruitment? The answer has to do with the strategic value of the international assignment. Internal recruitment is justified if the strategic purpose of the assignment is coordination or control of operations. However, in the case of learning units, for example when the subsidiary acquires and

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develops new resources that may be later exported to other parts of the organization, recruiting from the external market can be more appropriate. Recruitment Methods. The second decision to be made regards the choice of the recruitment methods. The major internal recruitment methods for international positions are (international) job posting and utilization of internal databases. To enable the company to identify suitable internal expatriates candidates, HR departments need to build global databases that include data on potential candidates, their work experience, performance, skills, availability, and their preferences regarding a potential international assignment: where he or she would be interested in working, in what capacity, and on what sort of projects.16 For example, Tetra pack developed their “Management Planning and Development” centralized database which contains the profile of over thousands high potential employees and which is updated once a year. This database is consultable by the HR directors’ community and can be used to support the expatriates’ recruitment process.8 The Danone Group’s Career recruitment site, for internal and external recruitment The Danone Group has opted for daily posting all vacant positions on the Danone Career website, which is accessible from the outside as well as from inside the company. To apply, candidates must find positions that correspond to their profile. The site is the fastest and most efficient way to obtain information regarding vacant positions within the Group, from anywhere in the world. To apply for a position, candidates must: 1 Conduct a search, specifying their level of experience (student seeking an internship, junior (1–2 years of experience), senior (2 years + of experience), or director/executive), their field of specialization and the geographical area where they wish to work. 2 Select a job offer within the search results 3 Study the job descriptions and apply. After having filled out his or her personal information on a form, the candidate can attach his or her CV and cover letter. Within 72 hours of applying, the candidate will get a receipt notification. The English language is preferred throughout the recruitment process. The Group searches for candidates with an international profile, and proficiency in English is highly valued. The candidate may, however, use the language of his or her choice in the free-text fields or in the attached documents. The progressive opening of the Careers website to foreigners will help facilitate the internationalization of the recruitment process. Fifteen countries currently use the website, and the international development continues. Source: Danone.fr

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When suitable candidates cannot be found internally, companies turn to the external market. External recruitment methods for international positions include using the Internet, launching campaigns in international media, using the services of recruitment agencies and/or international head-hunters, and establishing relationships with learning institutions.

Selection of International Employees The main objectives of the selection process are (1) enabling the company and the employee to determine whether the candidate possesses the competencies and motivation to successfully accomplish his or her international assignment, (2) minimizing the risk of assignment failure and the related costs, and (3) assigning candidates to suitable positions, thus maximizing the organization’s and the candidate’s benefit. Because of the specificity and implications of the task the expatriate will have to perform, multinational companies should ensure that they have an appropriate selection process for international assignments. We will now take a closer look at the selection criteria, the choice of the evaluators and the selection methods. Selection Criteria. In theory, the choice of selection criteria for international employees is based on an analysis of the characteristics of the multinational, those of the subsidiary, the host country, and the position to fill.11 Depending on the results of this analysis, the ideal candidate’s profile varies from one international assignment to the other (Exhibit 12.4).17 Given the considerable diversity of potential positions and host countries, it is not possible to draw a list of key competencies for expatriates.18 Unfortunately, organizations tend, when selecting expatriates, not to look far beyond technical expertise and previous performance in the country of origin. However, in the context of an international assignment, criteria related to the cross-cultural competencies and individual characteristics of the candidate, such as social orientation, will to communicate, good stress resistance, and open-mindedness, should be considered.15 Studies show that individuals who seek challenges, new experiences, and who enjoy learning are more likely to approach an international assignment in a positive and creative way, and are also more likely to succeed as expatriates. If the job analysis has been done properly, the selection criteria will be based on the international assignment’s competency profile. Choice of Evaluators. Black et al.4 recommend forming an expatriate selection team which includes managers from the country of origin and managers from the host country, as well as a representative from the iHRM department. Harris and Brewster16 note, however, that most of the time, the iHRM specialist’s role is limited to that of an advisor, while the actual decision is

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Exhibit 12.4 Determinants of the Selection Criteria for International Employees Multinational’s characteristics Stage of internationalization Industrial sector Business strategy HRM orientation iHRM policies Organizational culture

Subsidiary’s characteristics Legal form/ownership mode Localization

Selection criteria - Type of international manager - Education - Experience - Professional competencies - Personal characteristics - Cultural competencies

Host country’s characteristics National culture Labor laws and regulations

Position’s characteristics Function of the international assignment Job description and specification Contract duration Hardness of communication

Source: Waxin et al.11

taken by the managers alone. Marchon8 states that when the expatriation is requested by a subsidiary, the selection process is more transparent: the subsidiary, responsible for the selection, will make a final selection among several candidates it has chosen. However, when the expatriation is deemed necessary by the head office, the subsidiary’s role is often limited to approving or rejecting the final choice of the candidate. Selection Methods. Several methods are available, like interviews, psychological tests, assessment centers, work simulations or role plays, references, biographical and background data and so on. According to Linehan et al.,19 the interview is the most used and is still regarded as the most effective method to select overseas assignees. It provides a forum to understand the expectations and motivations of the candidate and to inform him/her about the job. The use of formal testing like psychological or relational tests is very limited in the practice but according to Harvey20 they are becoming used more frequently. Finn and Morley21 cite that cultural awareness and adaptability tests are almost never used because they are expensive, difficult to construct and interpret, and their reliability is questioned. Forster and Johnsen22 mention that in an international context there are some enormous problems with both suitability and comparability of tests for different national groups and

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cultures. Finally, the same authors note that the introduction of these tests encounters resistance from the selectors because this could undermine their power and prestige in terms of decision-making. Assessment centers are considered costly and time-consuming, but they regroup all the methods of evaluation in a single place within a few days. They allow the assessment of the communication skills and the adaptability of the candidates as well as their strategic competencies. References, and biographical and background data are principally used to ensure that the applicant has the necessary technical expertise to do the job, and are so less decisive in the selection of an expatriate, even if they can be useful to spot a particular candidate. According to the authors in iHRM, the best thing to assess a candidate correctly is the use of several different techniques and sources of data.

Expatriates selection process in a global fast-food multinational company Tricon Restaurants International, based in Dallas, Texas, is the franchiser for over 10,000 overseas Kentucky Fried Chicken, Pizza Hut, and Taco Bell Restaurants. The company has 100 expatriates; 20 are Americans working overseas. Tricon has established a very formal selection process to staff its overseas positions. Selection Criteria. Rather than choosing candidates who are merely excited about overseas assignment and who have the technical skills to perform the job, Tricon is taking a closer look at whether the candidates have the necessary personality characteristics, such as their empathy, their ability to adapt to different situations, their ability to interact with others (sociability), and the family support needed to succeed in overseas assignments. Selection Methods: (1) To select candidates for overseas assignments, Tricon interviews candidates about the positions, the country’s culture, and its marketplace. (2) If there is any doubt whether the candidate can make the adjustment, a consulting firm is hired to further assess whether the candidate has the personality needed to succeed in an overseas assignment. (3) If candidates pass the interview, a 360-degree feedback survey, which asks peers and their managers about their strengths and weaknesses, is used to evaluate their skills. (4) If the evaluation is positive, candidates and their families are sent overseas for a one-week look-see trip. During the visit, local

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managers evaluate the candidate while the family evaluates the community. The family spends time touring local schools and potential housing locations, and meeting with other expatriates in the country who help them understand the local culture and environment. (5) If the local managers find the candidate acceptable, the candidate, with input from family, can accept or reject the position. Source: Based on C. Patton.23

Harris and Brewster16 propose a typology of selection methods for international managers, which comprises four categories, placing the various selection methods on two axes: open/closed procedure and formal/informal procedure. First, the selection process can be open or closed. In an open system, all vacancies are advertised and anyone with appropriate qualification and experience may apply. All the candidates are interviewed with greater or lesser degrees of formalized testing. Selection decisions are taken by consensus amongst selectors. In contrast, in a closed system, selectors at corporate headquarter choose or nominate through line managers the “suitable” candidates. These candidates are informed only once agreement about acceptability has been reached between headquarter personnel and the line manager. The selection interview consists of a negotiation about the terms and conditions of the assignment. Then, the selection process can be formal or informal. In formal systems, vacancies are advertised internally, selection criteria are made explicit and are business focused, and directly related to the job description and job specification. Psychometric testing is likely to be used, and selectors need to agree among themselves about candidate match. In informal systems, there is a lack of specificity between competencies and job description, criteria are often not specified. Selectors assume that personality characteristics are already known, and give a great importance to networking, reputation, and team fit. There is an increasing likelihood that individual preferences of selectors can predominate (Exhibit 12.5). In practice, however, the majority of organizations operate predominantly closed and informal selection systems, which are not that different from the systems used for domestic assignments. Stahl24 states that 81 percent of the 116 expatriates sampled in his study were recruited through an opaque selection system, on the basis of nonstructured interviews. Only 19 percent of the candidates went through a structured interview. None of the candidates had had to pass a test, and in no case, at any moment during the selection process, was the life-partner taken into account (Exhibit 12.6).

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Exhibit 12.5 Typology of Expatriates Selection Processes Formal

Open

Informal

• Clearly defined criteria

• Less defined criteria

• Clearly defined measures

• Less defined measures

• Training for selectors

• Limited training for selectors

• Open advertising of vacancy (Internal/external)

• No panel discussions

• Panel discussions

• Recommendations

• Clearly defined criteria

• Selectors’ individual preferences determine criteria and measures

• Open advertising of vacancy

• Clearly defined measures

Closed

• No panel discussions

• Training for selectors

• Nominations only (networking/reputation)

• Panel discussions • Nominations only (networking/reputation)

Source: Harris and Brewster.16

Exhibit 12.6 The Expatriates Selection Methods N = 116 expatriates 90%

81%

80% 70% 60% 50% 40% 30%

19%

20% 10%

0%

0%

0%

Psychological Tests

Assessment Center

Inclusion of Partner

0% Unstructured Interview

Structured Interview

Source: Stahl.24

Closed and informal selection systems present at least three major disadvantages.16 First, they limit the degree to which interpersonal and intercultural skills are taken into account when selecting international managers. Secondly, they restrict the pool of potential candidates to the candidates who are appreciated by the selectors. This is particularly problematic for women, given the fact that between 80 and 95 percent of international managers are men. Within such an imbalanced selection context, it is all the more important to ensure that an open/formal selection system prevents potential discriminatory biases on the part of selectors. An open formal

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The expatriates selection processes in five Swiss multinational companies (Credit Suisse, Nestle, Holcim, Tetra Pak, Novartis) In each case the task of the selection falls to the host company, either through the line manager or through the HR., with sometimes a possible involvement of a central department. These persons have generally no particular international experience and therefore do not emphasize the cultural dimension throughout experience and therefore do not emphasize the cultural dimension throughout the selection process. The selection criteria mainly used by these five companies are based on technical and professional competencies, when the literature recommends relying firstly on crosscultural skills, without of course forgetting the professional skills. For all five companies, the selection methods employed to evaluate the competencies of the candidates are the references, the background of the employee and an interview. The informal selection procedure mainly leans on the personal contacts and the network of the selectors. An interview is normally used to confirm the selection choice. None of the companies uses any kind of formal testing to assess the cross cultural or relational skills of the candidate. However, three out of the five companies say they are willing to improve their selection processes in the near future by introducing some more structured selection tools in the selection process. Source: Marchon8 .

selection system forces the selectors to continually question their assumptions about women’s or other minorities’ suitability and their acceptability in international management positions. Thirdly, they prevent the organization from managing international assignments strategically. The role of the HR manager is limited to dealing with the financial, physical, and social aspects of international selection, instead of having an input into which kind of international manager is needed and what kind of assignment could be optimal for that international manager. In conclusion, although the researchers are unanimous about the significance of an effective selection system, there is a big gap between their suggestions and the organizations’ practices. As we will see, the work accomplished during the selection is also useful for determining the preparation needed by the selected candidate.

Preparation to Transfer When an appropriate candidate has been selected for an international assignment, he or she must get prepared to face the challenges of the new position. The purpose of the preparation step is to provide the expatriates with all the necessary elements that will help them succeed during the international

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assignment by facilitating their adjustment in the host country and allowing them to work efficiently throughout the duration of their contract. The options company can use include organizing preliminary visits, providing practical assistance to the international employees, providing language and cross-cultural training. Preliminary Visits or Look-see Visits. This is a trip to the host country offered to the assignee so that he or she can assess by himself the situation he or she will have to face. This option is sometimes used at the end of the selection process so that the candidate can confirm his or her acceptance of the position. During this trip the expatriate will finalize the contract and settle some issues like finding an accommodation or a school for the children. The expatriate will also get an idea about the new work environment. Usually, a preliminary visit includes the spouse, sometimes the children. Practical Assistance. This aspect of the preparation is to make everything ready for the transfer of the expatriate and his family in order to facilitate the settling in. This consists in arranging for the visas, for the transportation, finding a new accommodation for the family, new schools for the children, if it has not been done during the look-see trip, and so on. Many multinationals now use the services of relocation specialists to provide this practical assistance. Informing the expatriate on how the transfer will occur and how life in the host country will be will reduce the stress related to the uncertainty of the foreign assignment and facilitate the adjustment in the new environment. The organization should give adequate notice of the new posting given the professional and personal arrangements that the employee will need to make before he leaves his home organization and country. Language Training. The assignee is taught the language of the region where he or she will be sent. According to Ashamalla,25 language ability facilitates the adjustment in the local environment and enhances effectiveness in dealing with foreign counterparts groups including government officials, bankers, labor organizations, suppliers, and customers. The rigor of the training should depend on the relational aspect of the expatriate’s job. Cross-cultural Training. The objective of cross-cultural training is to teach members of one culture to interact effectively with members of another culture, and to predispose them to a rapid adjustment to their new positions. 26 Brislin,27 a cross-cultural psychologist, identifies three methods of cross-cultural training: cognitive, affective, and behavioral. The cognitive method corresponds to a diffusion of information, using conferences or nonparticipative sessions, in a foreign cultural environment. The affective method aims at provoking individual reactions so the subject can learn to deal with critical cultural incidents. The behavioral method aims at improving participants’ capacity to adapt to their communication style and to establish positive relationships

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with members of another culture. Management science researchers have used Brislin’s model and have added to it the situational (hardness of the culture and hardness of the communication, function and role of the manager, planned duration of expatriation) and individual variables (personal learning objectives, degree of active participation). Tung28 suggests that the training method should be chosen according to the type of assignment and should be contingent to two determinant factors: the degree of similarity between the culture of origin and the host culture (which is a synonym of cultural distance) and the degree of interpersonal interaction between the manager and the host country’s inhabitants, which would be linked, according to Black et al.,4 to the role and function of the manager. In conclusion, the different models of cross-cultural training and their content are built around three fundamental variables: the cultural distance between the country of origin and the host country, the manager’s level of integration with his environment, and the duration of the overseas assignment (Exhibit 12.7). Gertsen30 proposes a typology of training methods encompassing four categories. First, she identifies two kinds of training: conventional training, where the information is transmitted through a unidirectional communication, as is the case in schools and universities, and experimental training, where the trainer gets the trainees to participate by simulating real-life situations. Then, she identifies two possible orientations: either the training

Exhibit 12.7 Cross-Cultural Training Model Length of training

Level of difficulty

1–2 months

High

1–4 weeks

Cross-cultural training method and content

Moderate Cognitive approach Conferences Films/books Language (basic level)

Less than 1 week

Affective approach Role plays Case studies Critical incidents Stress reduction Language (intermediate level)

Intensive approach, or immersion Evaluation centre Field experiences Simulations Language (advanced level)

Low

Level of integration

Length of expatriation

Low

Moderate

1 month or less

2–12 months

High

1–3 years

Source: Adapted from Mendenhall, Dunbar and Oddou.29

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Exhibit 12.8 Types of Training Methods Experimental training General experimental training

Specific experimental training

General culture

Specific culture General conventional training

Specific conventional training

Conventional training Source: Gertsen’s typology of cross-cultural training.30

focuses on the notion of culture in general and aims at sensitizing participants to the notion of culture, or it focuses on one specific culture and aims at making participants more competent in that particular culture. According to Gertsen,30 the combination of these two dimensions reveals four types of training, as represented in Exhibit 12.8. In our research, we use these four types of training.

Pre-departure Cross-cultural Training Effectiveness Studies in the fields of cross-cultural psychology and management demonstrate the beneficial impact of cross-cultural training on expatriates’ cross-cultural adjustment.31 Their findings can be summarized in three conclusions: cross-cultural training is associated with (1) feelings of wellbeing and self-confidence, (2) development of appropriate behaviors in the context of the foreign culture, and (3) improvement of the relationships with host country’s inhabitants. In 2005, Waxin and Panaccio32 studied the impact of the four types of pre-departure cross-cultural training identified by Gertsen30 on the three facets of cross-cultural adjustment (work adjustment, interaction adjustment, and general adjustment) for French, German, Scandinavian, and Korean expatriates working in India. In summary, the findings of their research confirm the view expressed by researchers over the last twenty years that pre-move cultural training has a positive effect on adaptation to international assignments. The authors further contribute to the literature in three different ways. First, their study shows that experimental

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types of training are the most effective ones. Secondly, their results show that the larger the cultural distance between the country of origin and the host country, the more pronounced are the effects of cross-cultural training. Thirdly, the authors show that efficacy of inter-cultural training is clearly influenced by the magnitude of expatriate’s prior international experience. Cross-cultural training’s effectiveness is indeed stronger for managers with less international experience. Pre-departure preparation thus appears to be an important factor for adjustment. However, in most multinationals, cross-cultural preparation for expatriates is superficial, incomplete or simply nonexistent.32 The fact that decision-makers often have no international experience might, among other reasons, explain this state of affairs (see Box below).

Pre-departure preparation at Novartis, Switzerland Before formally accepting the overseas position, expatriates at Novartis are offered a look-see trip to the host country. English courses may be offered to the expatriate if needed, English being the official language of the company. Furthermore, if it is considered as essential that the assignee and his spouse have basic knowledge of the host country language, the company can pay for such a language tuition. Novartis invites then the assignee and the spouse to a pre-assignment briefing to coordinate the arrangements for the transfer, to explain the compensation package and to answer any question about the host country. Moreover, a cross cultural training is offered, consisting of a country briefing and a course about managing in the host country, communication and negotiation skills useful for the country of assignment. This training is provided by a native of the host country. Even if it lasts only 2 days, this preparation allows a better adjustment and expatriates are globally satisfied with it. A pre assignment check list is also given to the expatriate in order for him/her not to forget any important issue before leaving. Source: Marchon.8

As an alternative to pre-departure training, cross-cultural training in the host country could also be envisaged.33 Mendenhall and Stahl34 mention in-country real-time training as one of the three new tendencies that are emerging for HR managers who work in the international HR area, alongside with global mindset training and CD-ROM/Internet-based training. Further, corporations should provide cross-cultural training to expatriates’ spouses, since a lack of adjustment on their part could have negative repercussions on the adjustment of the expatriate himself. Finally, Harris35 notes that corporations would benefit from using their former expatriates as trainers for the new expatriates. Indeed, usage of the newly acquired competencies

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of expatriates is often neglected, and cross-cultural training constitutes an area where those competencies could easily be put to contribution.

Adjustment of the Expatriate Manager: Organization Support upon Arrival and during the Assignment Once the expatriate lands in the location of assignment, he or she needs further support from the company to adjust as quickly and smoothly as possible in the new job and in the new environment. Also, since the expatriate is supposed to come back to the home country after the realization of his mission, the company must also keep links with the expatriate so that the employee does not suffer from the out-of-sight, out-of-mind syndrome. Furthermore, maybe even more than the expatriate, the spouse needs also support. First, we will define the notion of adjustment and present the adjustment model and the expatriates’ adjustment factors. We will then see how the organization can support the expatriate employee, upon arrival and throughout the assignment.

The Process of Cross-cultural Adjustment Expatriates’ adjustment to their new role and environment is of great significance, both to the organization and to the managers themselves. From the organization’s perspective, expatriates’ degree of adjustment partially predicts performance and completion of the mission.36 From the managers’ perspective, adjustment is a factor of job satisfaction and psychological well-being.37 As a result, there has been a burgeoning academic and practical interest in understanding and measuring the adjustment process and its antecedents. Black38 defined intercultural adjustment as “the degree of an individual’s psychological comfort with various aspects of a host country.” The first conceptions of expatriate adjustment correspond to socioaffective conceptions of the cross-cultural adjustment process, which has been conceived for the last decades as following a U-shaped curve over time.39 The curve’s shape corresponds to the various stages which the individual goes through. Black and Mendenhall40 summarize the curve’s four steps in the following manner: 1. The first stage of expatriate adjustment is referred to as the “honeymoon” period. During that stage, the employee is fascinated, excited, and smitten with the host country’s culture. At this stage, the employee has only superficial contacts with his or her environment.

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2. The second stage, characterized by disillusionment and frustration, is that of the culture shock. The expatriate cannot understand the behavior of the people that surround him/her and realizes that his or her own behavior does not produce the expected consequences. During this stage, the expatriate doubts his or her own ability to face this new situation and temporarily adopts a negative attitude toward his or her new environment. This stage, which corresponds to the bottom part of the U-shaped curve, takes place approximately six months after the arrival in the host country. If the crisis lasts too long, the remainder of the adjustment process can be jeopardized. 3. The third stage is characterized by a gradual adjustment to the new context. During this stage, the expatriate becomes increasingly efficient. 4. The fourth stage, “mastery,” is characterized by a regular improvement in the individual’s ability to function efficiently in the new culture (Exhibit 12.9). Black and Mendenhall40 presented a critical review of the 18 studies based on the U-shaped curve theory. The results of these studies are difficult to interpret, and the U-shaped curve model remains imperfectly validated. In these studies, adjustment was measured through concepts operationalized in different ways, such as morale, psychological mood, favorable opinion of HCNs, satisfaction, comfort, and difficulties experienced in the new environment. Results of the various studies highlight the existence of individual differences, which suggest that different forms of adjustment may exist, with

Exhibit 12.9 The U-shaped Curve Model Adjustment degree 7 6

Mastery

Honeymoon

5 4 3

Adjustment 2 1

Culture shock 0 1

2

3

4

5

6

7

8

Months in the foreign culture Source: Black and Mendenhall.40

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curves that are not always U-shaped. Some expatriates do not experience a culture shock while some international managers who are considered very efficient in their jobs suffer from profound culture shock. The U-shaped curve theory and the concept of culture shock hide the multi-dimensional character of the adjustment process. Black38 conceptualized and demonstrated that intercultural adjustment contains three related but conceptually distinct facets: work adjustment, which concerns responsibilities and performance, interaction adjustment, which concerns relationships with nationals of the host country, and general adjustment, which concerns adjustment to host country’s living conditions, such as housing, food, leisure activities, and medical services. This typology has been validated by the works of Black and Stephens41 and Black and Gregersen,42 and is currently used in numerous studies. While they do correlate, work, interaction, and general adjustment do not follow the same curves. Studies show that the adjustment facets, despite having some common elements, are explained by distinct factors.

The Integrated Cross-cultural Adjustment Model Black et al.43 introduced the concept of “anticipation” in the cross-cultural adjustment model. These authors underline the importance of the anticipated adjustment phase, which takes place before the adjustment phase in the host country. Among the components of this anticipated adjustment phase, the previous international experience and the cross-cultural training or the preparation for the expatriation play a major part in explaining adjustment in the host country. Indeed, they allow the individual to build more realistic expectations toward his or her future work context, which reduces the occurrence and the magnitude of “surprises” while facilitating adjustment.44 Most studies on expatriate adjustment following that of Black et al.43 use their model, (Exhibit 12.10) studying in great detail the impact of the different variables on the cross-cultural adjustment process.45 Waxin (2006b) focuses on the in-country adjustment process. She studied the impact of culture of origin on the three facets of expatriates’ adjustment (work, interaction and general) and their antecedents.46 47 Her research model integrates organizational, individual, and contextual variables and introduces culture of origin as a direct and a moderator variable. She used self-administered questionnaire data from French, German, Korean, and Scandinavian expatriated managers in India, and multiple regressions with moderator variable. The results establish that culture of origin has a direct effect on the three facets of expatriate adjustment and a moderator effect on their antecedents. In the following text, we briefly comment on the major factors of adjustment. The summary of her research findings is presented in Exhibit 12.11.

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Exhibit 12.10 Cross-cultural Adjustment Model Individual characteristics

Individual Prior International Experience

Training

Work variables

In-country adjustment Anticipatory Adjustment

Organizational variables

Contextual variables Organization Selection process

Source: Black et al.43

Exhibit 12.11 The Integrative Model of Cross-cultural Adjustment Organizational variables Role clarity (H1) Role discretion (H2) Social supervisory support (H3a) Social coworkers support (H3b) Social home organization support (H3b)

Moderator variable Culture of origin

Logistical support (H4) Intercultural preparation (H5) Organizational similarity (H6) Indirect effect

Direct effect

Individual variables Technical competencies (H7a) Substitution capacity (H7b) Social orientation (H7c) Willingness to communicate (H7d) Openness capacity (H7e) Active stress resistance (H7f)

Work adjustment Interaction adjustment General adjustment

International experience (H8)

Contextual variable Partner support (H9) Time spent in host country (H10)

Source: Waxin (2006b).

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There are three major categories of variables influencing expatriates’ adjustment following expatriation: organizational, individual, and contextual variables. Organizational antecedents of expatriate’s adjustment comprise two jobrelated variables (role clarity and role discretion), three social support factors (supervisory, coworker(s), and home-country organizational support), logistical support, expatriation training, and organizational culture similarity. • Job-related Factors. Job-related factors of adjustment encompass role clarity and role autonomy. Ideally, before the departure of the expatriate, his or her supervisors in the home and host countries should agree on the precise definition of the role of the expatriate and on the degree of autonomy he or she will have in this position. • Organizational Social Support. This encompasses supervisory, coworkers, and home-country organizational social support. Social support provides expatriates with information about what is acceptable and unacceptable in the new work context. Organizational social support has been shown to reduce the time to proficiency of expatriates and to be positively related to the three facets of adjustment. • Logistical Support. Organizational logistical support can include a career assistance service for the spouse or a relocation service, which helps to reinstall the transferee’s family. If these services do not directly help the individual to adapt to his new post, they at least help to diminish the fear of the unknown. • Intercultural Training. Much of the literature suggests that training enhances expatriates adjustment.32 48 • Organizational Similarity. Perceived dissimilarity between homecountry and host-country organizations is a source of uncertainty and stress and thus relate negatively to expats adjustment. Individual antecedents of expatriates’ interaction adjustment are the six dimensions of expatriates’ adjustability and prior international experience. • Adjustability. Based on the works of Mendenhall and Oddou49 and Black50 , recent studies15 51 have identified six dimensions of the expatriate’s adjustability, each one being measured by a battery of items. The dimensions are confidence in their own technical competencies, social orientation, willingness to communicate, substitution capacity, cultural openness, and stress resistance. All these adjustability dimensions are positively correlated to adjustment. • Prior International Experience. Theoretical discussions have, for a long time, included previous international experience as relevant for the

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adjustment process. Theoretically and intuitively, it makes sense to assume that international experience allows a quicker and more complete adjustment. Waxin (2006b) found that prior international experience was positively correlated with adjustment. Finally, contextual antecedents encompass partner’s social support, time spent in the host country, and culture of origin. • Partner’s Social Support. Partner’s social support is viewed in the literature as an important influence on the worker abroad. Partner’s social support reduces the stress generated by the new work environment and thus facilitates expatriates’ adjustment. • Length of Time Spent in Host Country. Adjustment is a time-related process. Individuals need time to get accustomed to their new environment and learn the host country culture and appropriate and acceptable behaviors. Time spent in the host country is positively related to expatriates’s adjustment. • Culture of Origin. Research suggests that the more different the host culture is from the home culture, the more demanding the adjustment will be. This phenomenon is known variously as the effect of cultural distance or culture. There is a further point arising out of the cultural differences literature. Different cultures may be more or less effective as expatriates in certain countries. Waxin (2004, 2006b) contributes to the literature in two different ways. First, she showed that expatriates’ adjustment degree varies significantly according to their culture of origin. This is termed the direct effect of country of origin on the adjustment degree. Secondly, she showed that the antecedents of adjustment vary according to the specificities of expatriate’s culture of origin. This is termed the moderator effect of culture of origin. The results of this research have important implications for the management of expatriates, especially in the fields of recruitment, intercultural training, and support management policies. As far as expatriate recruitment is concerned, technical expertise and domestic track record are by far the dominant selection criteria. Our results show that different facets of adjustability are crucial to the adjustment process. Crucially, knowledge that culture of origin/cultural distance is a significant predictor of adjustment suggests that organizations may need to revise their international staffing policies. If culture of origin is critical then selecting TCNs for whom the country of assignment is not that different culturally from their own may be a sensible policy. Cross-cultural training appears to be an important factor of adjustment, especially when it comes to interaction and general adjustment. The training must be in accordance with the hardness of the culture of the

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host country. The more different that culture is from that of the country of origin, the more important and necessary is the use of cross-cultural training programs. Finally, managers might use the results of this study to facilitate the adjustment of expatriates to their new position abroad. Antecedents of adjustment are not the same across the national groups of expatriates. Our results suggest that management may be well advised to implement policies and practices to provide effective support and encouragement to expatriates, which take account of cultural and personal needs. Support on place at the point of arrival. The first support the expatriate will need after arrival on location should focus on resolving the immediate living problems, as where to register to the local authorities, where to go shopping, and how do the phone system works. • The company could grant the expatriates leave for the first critical days, or at least allow him/her flexitime during the first week. • Providing help to the expatriate to fix his or her administrative and practical duties will allow him or her to quickly concentrate on the job-related issues of the assignment. The company can also resort to an external provider to counsel the expatriate during the first days of his or her assignment. • Moreover, to assist the expatriate in his or her early adjustment, the company should also provide him/her with local information about the social events happening in the region and the different social clubs. • Furthermore, the support on arrival should also take into account the work environment. The expatriate should be properly introduced to his colleagues and the employees he will work with. Selmer52 notes that a job overlap is not always possible and is relatively expensive, but very helpful. The predecessor could also assume the role of a temporary personal coach of the successor. • Finally, continuing an on-site cross-cultural training during the early stages of the assignment will also prove useful to accelerate the expatriate’s adjustment process. Ongoing Support. Hippler53 (in Linehan et al.19 , p. 180) writes that in the ideal case the on-arrival support with regard to social integration has proven successful to an extent that the expatriate needs no further formal assistance, social support being normal. • The host company should design a local coach to whom the expatriate can turn whenever he or she experiences sudden difficulties. • The home company could also formally or informally appoint the expatriate with a sponsor/mentor based in the home organization,

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responsible of informing the expatriate about the important issues and changes. The contact should be via regular e-mails and phone calls while the expatriate is in the host location, and the expatriate should meet with the mentor in the home office when possible. The sponsor/mentor will also play an important role at the repatriation step. A mentor can also keep the expatriate “visible” by communicating an expatriate’s accomplishments across the organization via articles in company newsletters or reports on the Intranet. In any case, the expatriates should do his or her best to keep formal and informal contacts with former collaborators in the home organization. • The home company should also stay in contact with the expatriate throughout the assignment, to keep him/her updated about the changes in the domestic operations, the evolution of the organizational policies, the ongoing projects, and the staffing changes. Multiple means of communication are available: visits of head offices managers, homecoming of the expatriate, telephone communications, video conferences, e-mails, letters, company newsletters, and so on. • Finally, the expatriate should keep in touch not only with his or her home company, but also with his or her family and friends,19 because being separated from relatives and friends is one of the worst aspects mentioned by the expatriates about their international assignment. According to Katz and Seifer54 (p. 42), in-post support systems should be established and coordinated between repatriated staff, senior expatriated staff, and new expatriates. However, the practices in the organizations do not correspond to the suggestions in the literature. The establishment of mentorship programs in the home company is not much developed. Marchon8 studies expatriation practices in five Swiss multinationals. He found that only one company, Holcim, organizes formal contacts between expatriates and the HR department of the home country, twice a year. Otherwise, the relations an expatriate could have with his or her former subsidiary are generally left to the initiative of the employee. Support for the Family. The spouse is the most likeliest person to suffer as a consequence of an international assignment, especially if he or she gave up his or her work to follow the assignee and is not reemployed in the new location. So the company should help the spouse to develop his or her personal network. For example, the company could bring the spouses of expatriates together or encourage the spouses of other employees to take an interest in the newly relocated spouse and provide him/her with information about the neighborhood, the local activities, and serve as a source of new friendship.

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• Language courses should be provided for the spouses during the assignment, since they will have frequent contacts with the local population when accomplishing the basic tasks of household, going shopping, or dealing with the school. Shaffer and Harrison (Bauer and Taylor55 , p. 136) established that language skills is the factor that most influence the ability of the spouse to rebuild a personal sense of identity and, as a result, achieve greater adjustment. • The organization should also provide a support for the spouses who want to work in the country of assignment, for example by providing a briefing about the local employment conditions and the way to apply. If no job is found, the spouse could be given the opportunity to continue education. • Finally, the children’s adjustment and education are critical issues in the mind of most expatriated parents. The company must make sure that the children will be able to attend a school providing a good teaching. In many areas, only private, international, or even boarding schools can be considered and the company should take the costs in charge.

Performance Appraisal The evaluation serves several purposes: development, evaluation of the employee’s contribution, give grounds to administrative decisions regarding, for instance, compensation and promotions. Individual performance management involves a formal process of goal setting, performance appraisal, and feedback. When designing a performance appraisal system, at least four elements should be taken into account: the objectives of the organization, the staffing perspective, the internationalization strategies, and the particularities of the local context. The difficulties and specificities of performance appraisal in an international context come from the possible conflict between global and subsidiary objectives, the problem of noncomparability of data between subsidiaries, the volatility of the international market, and the variable levels of market maturity. Further, it is important to reconcile the tension between the need for universal appraisal standards with specific objectives in local units, and to recognize that more time may be needed to achieve results in markets which enjoy little supporting infrastructure from the parent company.56 The principal challenges related to the performance evaluation of the expatriates are the determination of the evaluation criteria, the choice of the evaluators, and the delivery of timely and culturally sensitive feedback. The Evaluation Criteria. The criteria must be relevant to the context of the assignment. Black et al.4 (p. 166) mention that, in the case of an expatriate, the criteria which are seen as factors of success in the home country may make no sense in a foreign setting. The real factors of success of an international assignment can be totally different from the ones in the parent

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company. For example, for an expatriation in China, developing good relationships with the local government, diffusing a good image of the company, and establishing good working relationships with the suppliers may be much better for the long-term success of the firm than the immediate maximal profits. To determine the proper evaluation criteria, the evaluators should refer to the job description and specification, where the important goals and tasks of the position are defined. Hard, soft, and contextual goals tend to be translated into performance appraisal criteria. Dowling and Welch12 mention that financial results for any subsidiary do not always reflect accurately its contribution to the achievements of the whole corporation and that, therefore, these should not be used as a primary input in performance appraisal. Janssens and Brett5 mention that performance appraisal of subsidiary managers against hard criteria is often complemented by frequent visits by headquarter staff and meetings with executives from the parent company. Soft criteria are used to complement the hard ones and take into account arrears that are difficult to quantify like leadership or communication skills. However, in an international context, the evaluation of these soft criteria is somewhat subjective and more complicated due to cultural biases. An appraisal system using multiple hard, soft, and contextual criteria is strongly recommended in the relevant literature. Lindholm et al.57 mention that European firms are more likely to pay close attention on long-term goals rather that the short-term measures used by US companies. In part, this reflects the growing use of international assignments for developmental purposes in European MNEs and the greater integration of expatriation into the overall career development process in European firms.58 The Evaluators. As in any evaluation, the raters must have the competencies and the experience necessary to assess correctly the performance of the expatriate, be given regular opportunities to directly observe the performance, and be motivated to do so. Theoretically, the evaluators can be a manager from the home country organization or from the regional headquarter, the immediate superior of the expatriate in the host country if there is one, peer managers, clients, and the expatriate himself. Black et al.4 (p. 175) suggest that a team of organization members should be involved in the performance appraisal of global managers: the team coordinator should be a senior HRM manager and would have to collect and analyze the feedback from the other team members: the expatriate’s on-site superior, peer managers, subordinates, clients, and the expatriate himself. The authors suggest to rely on several rater’s evaluations to avoid possible biases. Several studies have focused on the expatriates’ evaluation practices in MNE, in US and in Europe. In practice, the local supervisor is the most likely possibility to assess the expatriate performance. Gregersen et al.59 surveyed HR directors in 58 US multinationals. They report that in the USA

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the most common rater is the expatriate’s immediate supervisor, either from the host country (74%) or from the home country (39%). Moreover, they found that 81 percent of the firms used more than one rater when assessing expatriate performance. The immediate supervisor (in either the home or the host country), the expatriate as self-rater, and the HR manager (either home or host country based) were commonly used as multiple evaluators of expatriate performance. Half of the expatriate group (51%) were on performance-based bonus systems linked to the outcome of the evaluation. The majority of the firms reported annual appraisal practices. Suutari and Brewster60 studied the management practices among 170 Finnish expatriates. In Finnish MNE, most commonly, the expats’ evaluation is carried out by a foreign supervisor (36%) or by a Finnish supervisor (22%), but other forms like evaluation by the managing directors or area/country managers, who were not direct supervisors of the expatriates, were also common. Of these firms, 76 percent used the same standardized appraisal forms for the expatriate appraisal. Finally, Marchon8 studied the evaluation practices in five Swiss multinationals. In all the five studied multinationals (Tetra Pak, Holcim, Novartis, Credit Suisse, and Nestlé), the work of the expatriate is evaluated by the direct supervisor in the host country. At Tetra Pak, Credit Suisse, and Novartis, any assignee is evaluated by his or her direct supervisor, who sets the objectives, assesses the performance, as it is the case for any other employee. At Holcim, the expatriates are also evaluated by the direct local supervisor but using a standardized form developed by the headquarters for the assessment of international assignees. Surprisingly, only one company, Nestlé, has put into place a process by which the home company receives the evaluation of the expatriate’s work. The evaluation system is standardized within the group, and is the same for the expatriate and the local employees, but in the case of the expatriate, a report on his performance is sent once a year to his or her home company. In none of the five organizations, a formal team is created for the evaluation of the expatriates. The performance Feedback. Provision of timely and regular feedback is an important element of an appraisal system in terms of meeting and revising goals, and in motivating work effort. Most of the expatriates are evaluated once a year and sometimes by a geographically distant evaluator, which makes it difficult for them to get timely and regular feedback on anything else than hard criteria. Another difficulty is that sometimes the evaluator is not from the same culture, and that giving feedback must be done in a culturally sensitive manner. People from different cultures give and take appraisal feedback in very different ways. At Pepsi-Cola International, instant feedback is one of the five elements of their standardized performance appraisal system, along with coaching, accountability-based performance appraisals, development feedback, and HR plan.56 The common system provides guidelines for

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each of these practices but allow for cultural adaptation of these practices. For example, the instant feedback practice is based on the principle that any idea about any employee’s performance is raised appropriately and discussed in a sensitive manner. The “how it is done” is locally adjusted to the different cultures. In Asian cultures, feedback can be tough and direct but never given in public; Indian employees expect some great extent of specificity and precision, Latins can argue very strongly in case of disagreement. Pepsi-Cola International managed to balance the imperative of standardization with the other imperative of cultural sensitivity.

Compensation of International Employees The objectives of an effective compensation system are to attract and retain quality people for global assignments and to motivate them to an acceptable and ever-improving standard of performance. Total pay packages have four components: the base salary, taxes, benefits, and allowances. Three standard methods are regularly utilized by multinational companies to determine the base salary of their international employees: the balance sheet (or home based) approach, the local market (or host based) approach and the international approach. Then, different kinds of allowances are meant to compensate particular troubles related to the relocation. Finally, taxes and benefits have to be fixed. 1. Three methods to determine the base salary a. Balance Sheet Approach. This is the most commonly used approach. It entails developing a total compensation package that equalizes the purchasing power of the expatriate with that of employees in similar positions in the home country and provides incentives to offset the inconveniences of the relocation. The employee starts with a set of costs for taxes, housing, goods and services, and saving (reserve) in the home country. In the host country, these costs are higher. The company must then make up for the difference between costs in the home and costs in the host country. On top of this, the company must provide a premium/incentive for the employee to go through the trouble of the relocation. This approach is particularly recommended when expatriates come back home directly after their assignment and works well when expatriates originate from the same home country. b. Host-based Approach. The host-based approach calculates the base salary relating to the host-country standards. Typical

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allowances will also be added in order to create a fair compensation package. This method reduces the inequality between expatriates coming from different locations and working in the same area, as well as the inequity between local employees and expatriates. But such system is only effective if the country of destination have relatively high wages, because it is easier to convince individuals to accept pay scales that are greater than what they would have otherwise. This approach is principally used by companies which have little need for expatriation. c. International Approach. The international approach tries to create an equitable system among all international employees. This method begins with a common point of reference for expatriates who receive equivalent pay and benefits regardless of their country of destination. This approach is more easily applicable when the international employees are career internationalists and move from one foreign assignment to another. This approach is often more costly and is used by companies needing as small number of global managers. 2. Tax equalization allowances Tax equalization allowances are necessary because of the countries’ different taxation systems. Under most tax equalization programs, the company withholds the amount of tax to be paid in the home country and pays all of the supplementary taxes accrued in the host country. 3. Benefits Most of the difficulties encountered at this place relate to the transportability of the pension plans and the heath care coverage. Here are examples of the questions raised: If an expatriate contributing to the home country pension plan is transferred abroad, should he take a new pension plan in the host country or should he continue contributing to the home country plan? How can the company ensure that the expatriate will have equal health care coverage than their colleagues back home? 4. Allowances Finally, all kinds of allowances are offered to make the expatriate assignment less unattractive. The allowances can be offered in nature or in cash. They can be paid in a lump sum or throughout the assignment as a part of the monthly compensation. The amount usually depends on the employee’s position, family size, and area of destination.

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• Cost of living allowances are payments that offset the differences in expenditures on day-to-day necessities between the host country and the parent country. • Housing allowances ensure that the expatriate can maintain the same home country housing standard. • Education allowances cover the educational costs of the children of the expatriate, when they have to be placed in private home country language schools. • Relocation allowances usually cover the costs of the moving. • Home-leave allowance consists in air fare between the countries of assignment and origin for the expatriate and his or her family.

Repatriation and Retention The repatriation is the activity of bringing the expatriate back to the home organization. Although it is now widely recognized by managers and academics that repatriation needs careful managing, this step is generally neglected. In this section, we will examine the different problems faced by repatriates, then we will discuss some retention issues and finally we will see how organizations could build an effective repatriation system.

Potential Problems Faced by the Expatriates Although the expatriate and his or her family reintegrate their culture of origin, a several-year experience in a foreign culture makes the rehabilitation difficult. After living abroad for years, the expatriate and his or her family have changed, the home country and the home organization also. So, when returning home, the expatriate and the whole family may face a “reverse culture shock.” If nothing is undertaken to minimize its impact, the employee will suffer from maladjustment, which could lead to job underperformance and job dissatisfaction. The other problems associated with re-entry into the home organization include loss of status, loss of autonomy, loss of career direction, loss of income, and a feeling that their international experience is undervalued by the company.61 Interestingly, concern over re-entry was cited as a significant reason affecting expatriate performance in European MNEs.62 For many European MNEs, this problem has become more acute in recent years because expansion of foreign operations has often taken place at the same time as rationalization of domestic operations, and fewer unfilled positions are available to returning expatriates in most companies.61

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The family may also face important challenges during the repatriation. The spouse may encounter difficulties to reintegrate into the domestic employment market, especially if he or she has not worked during the assignment. The children may come back to a country where they have been out of touch with the latest events and fashion styles, and may have difficulties to adjust to a new educational system. Moreover, after years abroad, expatriates return to an organization that may have undergone significant changes in strategy, structure, information and assessment systems, and in formal and informal processes. If the communication during the assignment was insufficient, the expatriate may feel a loss of connection with the home office, which can enhance an impression of isolation and encourage the repatriate to leave the company. In the next paragraphs, we will examine how to build an effective repatriation system.

Building an Effective Repatriation Process The company must anticipate the repatriation problems and plan actions to facilitate the reintegration of its international employees and their family. Most of the methods used to facilitate the adjustment process before the transfer can also be used for the repatriation process. In the next paragraphs, we will examine the steps of an effective repatriation process, which starts during the assignment and extends after the coming back home. The authors in the field recommend generally three steps in the preparation of the repatriation process. 1. Determination of Ownership for the Repatriation Activities. Normally, this should have been clarified before the departure. Black et al.4 propose the creation of a repatriation team, consisting of an HR department representative and the expatriate’s supervisor in the home country, or his sponsor/mentor. The role of this team is to initiate the preparation for the return and to take responsibility for identifying an appropriate return position for the expatriate. Collaboration between home and host HR and line management is essential when it comes to the managing of the international assignments. Confusion will make communication between the expatriate and the HR more difficult, and will make the expatriate feel less supported. 2. Pre-return Preparation. The repatriation should be planned much before the effective home-coming, and should ideally start at least six months before the end of the international assignment.63 • The company should give the expatriate sufficient time between the warning of the repatriation and the effective transfer to allow the expatriate and his or her family to make anticipatory adjustment before returning to the home country. Several information sources

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should be made available to the expatriate and his or her family to help them develop accurate expectations about the return. • The company should inquire about the expectations of the expatriate regarding his or her expected return job and his or her career goals and initiate an internal search to find a suitable position. In the ideal case, expectations about re-entry should have been already set up at the end of the selection process. Even if a specific job at the end of the assignment cannot be guaranteed, the assignee should at least know what opportunities are available in the company and how they can be considered for them. • The organization should appoint an organizational sponsor/mentor, who could be an accurate source of information about the company-related changes. The sponsor should have himself/herself experienced expatriation and have sufficient influence to act as a supporter for the expatriate • Periodical visits to the home country just prior to the repatriation give the expatriate the opportunity to develop accurate expectations about what is happening in the home country and in the organization. • The company should also provide pre-return training and orientation. Essential information about the repatriation process can be provided in a workshop/training program, including such matters as housing, financial compensation packages, school system, and so on. • Finally, the company should provide assistance to the expatriate family to find a suitable accommodation back home. 3. Post-return adjustment. Black et al.4 note that the most pivotal component of successful repatriation for expatriates is the selection of a return job assignment, taking into account the expats’ skills, competencies, and the new interests developed during the international assignment. In order to avoid potential problems between the expatriate and his or her colleagues and supervisor, they could also attend training or an orientation program. The company could also organize a collective debriefing about the expats’ international experience. Finally, in order to allow the expatriate to make the transition quietly, the organization should leave time for the expatriate, and give him one week off to settle down, or allow him/her to have reduced working hours during the first days.25

Exhibit 12.12 rates the effectiveness of different ways to reduce expatriate turnover, from high, medium to low effectiveness. The results are consistent with many past surveys. Survey respondents included both small and large

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Exhibit 12.12 Methods of Reducing Expatriate Turnover and their Effectiveness Method

High

Chance to use experience Recognition Position choices upon return Repatriation career support Response to security issues Improve performance evaluation Family repatriation support

Medium

62% 60 59 31 26 25 22

32% 34 33 52 51 51 48

Low 6% 6 8 17 23 24 30

Source: GMAC Relocation Services.64

organizations; for 79 percent of the respondents, the company headquarters was in the United States. In most cases, respondents were senior HR professionals and/or managers of international relocation programs. Retention. Many expatriates leave their company on return60 with the consequent loss of investment and expertise. Moreover, the departure of high-potential repatriates is not only a loss for the company, but may give an advantage to competitors that could attract them and take advantage of their international experience. Lazagrova and Caligiuri65 (p. 395) note that most activities that ensure high retention after repatriation happen during rather than after the assignment. According to the 1999 Global Relocation Trends Report (cited by Lazagrova and Caligiuri65 (p. 390), 12 percent of the expatriates leave their company within a year after returning home and 13 percent leave within the following year, for a total of 25 percent of international managers leaving their company within two years after repatriation. Vermond66 (pp. 31–32) put forward the fact that many companies, between 25 and 33 percent of the respondents in her survey, do not know the rate of assignees leaving the organization within the twelve months. These statistics show that companies have not yet understood the importance of the retention of their expatriates and do not consider expatriation as an investment.

Women in the Global Arena The number of female expatriates is low in relation to the overall size of the qualified labor pool.67 However, the proportion of females is increasing clearly and steadily, from only 5 percent in the ORC 1992 survey to 14 percent in the ORC 2002 survey, and even 18 percent in the GMACRelocation Survey 2002.

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Several recent studies challenge the usual beliefs regarding the low suitability of females for international assignments. Caligiuri and Tung68 studied the performance of male and female expatriates in US-based multinationals. They found that females can perform equally as well as males regardless of a country’s attitude toward women in managerial positions. Stroh et al.69 found that US and Canadian women are interested in and likely to accept international assignments. The authors note that the women in their study tended to believe that their employers were reluctant to propose an international assignment to them, although their supervisors did not think so. Fishlmayr70 studied the external and the self-established barriers to Australian females taking international assignments. The author found three major external barriers: HR managers reluctant to select female candidates, culturally tough locations preclude female expatriates, and those selecting expatriates have stereotypes in their minds that influence the decisions. The major self-established barriers were the following: some women have limited willingness, the dual-career couple, and the fact that women are often a barrier to their own careers by behaving according to gender-based roles. The author concludes that women are partly responsible for their underrepresentation. Mayrhofer and Scullion71 studied the experiences of male and female expatriates in the German clothing industry in different countries, including the Muslim ones. They found few differences in the experiences of both groups. However, female expatriates put more values on integration of spouse/family issues before and during the assignment than did their male counterparts in their sample. Finally, Napier and Taylor72 studied female expatriates from different countries, Japan, China, and Turkey, distinguishing between traditional expatriates, trailers (spouses of males expatriates), and self-selected expatriates. The authors found that the main challenge of these women was gaining credibility with local clients. Accommodating cultural differences and maintaining an active social life and appropriate interpersonal skills were factors of successes in their missions. Being foreign women granted them higher visibility, and so was an advantage in terms of getting access to key local persons. To conclude, the predictors of success of women expatriates are the same as for their male counterparts. The differences between both genders are the degree of importance granted to the different factors of adjustment/performance, the value placed on intercultural training issues, and the fact that dual career issues are a greater barrier for female mobility as males are more reluctant to follow their spouse overseas.

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Companies that are serious in encouraging women to work as expats will develop a distinct competitive advantage: by stimulating and actively supporting female expat careers, the pool of talent for top management positions gets filled with a larger number of qualified individuals. This increases the chance of appointing the right person for the right top job. With more women becoming expats, it can be expected that traditional assumptions and the related questions will gradually disappear.73

Chapter Summary Throughout this chapter, we have studied five topics related to iHRM. First, we have examined the four major approaches to staffing foreign operations: ethnocentric, polycentric, geocentric, and regiocentric. Secondly, we have examined the reasons for using international assignments: position filling, sharing and transferring knowledge, developing employees, controlling and coordination of international activities. Thirdly, we have detailed the different categories of international personnel: PCNs, HCNs, and TCNs, and impatriates. We have also presented the different types of international assignment for PCNs: expatriates, short-term assignees, international commuters and frequent flyers, global managers, and high potentials. Fourthly, we presented the different steps of Waxin (2007) model for strategic management of international assignments. The model consists of eight steps: strategic planning and job analysis, recruitment, selection, preparation to transfer, cross-cultural adjustment and organizational support, performance appraisal, compensation, and repatriation and retention. Finally, we have examined the position of women in the global arena today.

Closing Case A Dilemma In this UAE MNE, top management at HQ believes local markets are very distinct and local management has a high degree of autonomy. International communication, co-ordination and control are low—the most important monitoring mechanisms are the yearly budgets and the financial objectives for foreign subsidiaries. You are Mohammad, the HRM manager at the head office, in Sharjah, UAE. In the German subsidiary (250 employees), in Munich, Jürgen, the HR Manager fell ill shortly after his assistant Thomas left for personal reasons. The director will not come back before 5 weeks. The German HRM department is totally disorganized.

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The German managing director of the subsidiary, who is clueless, ask you to help them: They urgently need to recruit one high potential manager to replace Thomas, the assistant. This person will help the HR manager in all his activities and specifically be responsible for TQM, Career Development and Training activities in the German subsidiary. Question: What kind of international employee do you prefer to recruit? Briefly describe the job content, job requirements, and job context of this position. If you employ a PCN employee, how will you prepare him/her for this international assignment? Source: Marie Waxin.1

Review and Discussion Questions 1. What are the different approaches to international staffing? Outline their main characteristics. 2. What are the functions of international assignments? 3. What are the reasons for using international assignments? 4. What are the positive and negative aspects of a Parent Country National? 5. Discuss the statement that most expatriate selection decisions are made informally. 6. What are the challenges faced in training expatriate managers? 7. What organizational factors have an impact on expatriate’s cross-cultural adjustment? 8. What are the main objectives of a multinational Company’s compensation policy? 9. Describe the main differences between the different methods used to determine the expatriate’s base salary. 10. What elements would you include in a repatriation program?

Endnotes 1. Waxin, M.-F., Strategic Management of International Assignments, unpublished document, 2006. 2. Perlmutter H., “The tortuous evolution of the multinational corporation”. Columbia Journal of World Business, 1969, pp. 9–18. 3. Heenan, D. A. and Perlmutter, H, Multinational Organization Development (Reading, MA: Addison-Wesley, 1979), pp. 18–19. 4. Black J. S., Gregersen H. B. and Mendenhall M. (eds), Global Assignments: Successfully Expatriating and Repatriating International Managers, (San Francisco: Jossey-Bass, 1992).

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5. Janssens M. and Brett J. M., “Coordinating global companies: the effects of electronic communication, organizational commitment, and a multi-cultural managerial workforce”. Trend in Organizational Behavior, Vol. 1, 1994, pp. 31–46. 6. Harris H. (ed.), “Strategic management of international workers”, Innovations in international HR, Vol. 28(1), Winter 2002, pp. 1–5, Organizational resource consellors, London, 2002. 7. Leslie Gross Klaff, “Thinning the ranks of the ‘career expats’ at Avaya”, Workforce Management, October 2004, pp. 84–87. 8. Marchon J. (ed.), 2004, “Expatriation management: Theoretical principles and practices in Swiss-based multinational companies” (Master’s thesis, Economics and Social Sciences Faculty, University of Fribourg, Switzerland), 2004. 9. Harris, H. and Holden, L., “Between autonomy and control: expatriate managers and strategic IHRM in SME”. Thunderbird International Review, Vol. 43(1), 2001, pp. 77–101. 10. Black, J. S. and Gregersen, H. B., “The right way to manage expats”. Harvard Business Review, March–April 1999, pp. 52–60. 11. Waxin, M.-F., Davoine, E. and Barmeyer, C. “Gestion des Resources Humaines Internationales” (Paris: Les Editions de Liaisons, 2007). 12. Dowling Peter J. and Denice E. Welch (eds), International Human Resource Management: Managing People in Multinational Context (London: Thomson Learning, 2004). 13. Tahvanainen, M. (ed.), “Expatriate performance management: The case of Nokia Telecommunications”, Acta Universitatis Oeconomicae Helsingiensis A-134, Helsinki School of Economics and Business Administration, Helsinki, 1998. 14. Harvey M., “Focusing the international personnel performance appraisal process”. Human Resource Development Quarterly, Vol. 8(1), 1997, pp. 41–62. 15. Waxin, M.-F. “The adjustability of the expatriate manager: Proposal of an improved measurement scale”, 20th Workshop on Strategic Human Resource Management, Brussels, April 28–29, 2005. 16. Harris, H. and Brewster, C. “The coffee-machine system: How international selection really works”. The International Journal of Human Resource Management, Vol. 10 (3), 1999, pp. 488–500. 17. Harvey, M. and Novicevic, M, “Selecting expatriates for increasingly complex global assignments”. Career Development International, Vol. 6(2), 2001, pp. 69–86. 18. Jordan, J. and Cartwright, S, “Selecting expatriate managers: Key traits and competencies”. Leadership and Organization Development Journal, Vol. 19(2), 1998, pp. 89–96. 19. Linehan, M., Morley, M. and Walsh, J. (eds): International Human Resource Management and Expatriate Tranfers: Irish Experiences (Dublin: Blackhall, 2002), pp. 108–109. 20. Harvey, M, “The selection of managers for foreign assignments: A planning perspective”. Columbia Journal of World Business, Vol. 31(4), 1996, pp. 102–118. 21. Finn, L. and Morley, M. (2002) in Linehan, M., Morley, M. and Walsh, J. (eds), “International Human Resource Management and Expatriate Transfers”. Irish Experiences (Dublin: Blackhall, 2000), p. 102. 22. Forster, N. and Johnsen M, “Expatriate management policies in UK companies new to the international scene”. The International Journal of Human Resource Management, Vol. 7(1), 1996, pp. 177–205. 23. Patton C, “Match Game”. Human Resource Executive, 2001, pp. 36–41. 24. Stahl, “Between ethnocentrism and assimilation: Challenges and coping strategies of expatriate managers”. Academy of Management Proceedings, IM: E1-E6, 2000. 25. Ashamalla, M, “International human resources practices: the challenge of expatriation. Competitiveness review”, Vol. 8(2), 1998, pp. 54–65. 26. Mendenhall, M. and Oddou, G, “Toward a comprehensive model of international adjustment: An integration of multiple theoretical perspectives”. Academy of Management Review, Vol. 16(2), 1991, pp. 291–317.

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